ACCC appeal up against court plus reality of sale

The competition regulator will fight today to overturn a court ruling that allowed grocery wholesaler Metcash to buy Franklins supermarkets, although the sale has taken place.

The Australian Competition and Consumer Commission launched an appeal in early September against the entire judgment of Federal Court judge
Arthur Emmett
after he approved the $215 million deal. He said the merger was “quite likely" to help independents such as IGA take on Coles, Woolworths and Aldi.

Federal Court judges Paul Finn, Robert Buchanan and David Yates will hear the ACCC argument on why the deal will substantially lessen competition and should not be allowed to stand.

The appeal is being run despite Justice
Peter Jacobson
refusing to grant an injunction in favour of the ACCC to prevent Metcash and Franklins from pushing ahead with the deal.

In his September 20 judgment, the judge said the ACCC failed to point to “any glaring error or obvious oversight" in the primary judgment, and allowed the deal to be completed on September 30.

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“The sale agreement provides Pick ’n’ Pay with the ability to make a certain exit from the business which is of considerable commercial benefit to it," Justice Jacobson said. “Although the matter is under appeal, some weight should be given to the primary judge’s finding that the transaction is pro-competitive."

When the appeal was filed, ACCC chairman
Rod Sims
said the outcome of the case was important because it had serious implications for the regulator and its ability to “block anti-competitive mergers".

Those involved in Foxtel’s $1.9 billion bid for Austar are expected to watch the appeal; the ACCC is yet to announce if it opposes that merger.

Metcash and Franklins may be faced with complex divestiture orders if the full Federal Court upholds the appeal.

But the ACCC needs to overturn a number of findings by Justice Emmett in order to be successful. It had argued the merger would remove Franklins’s only genuine rival in ­supplying packaged groceries to ­independent retailers in NSW and the ACT.